HP to produce one final run of TouchPads to meet ‘unfulfilled demand’

“HP has plans to produce another round of its TouchPad tablets before the year is out, despite its earlier decision to discontinue its mobile hardware products,” Mike Isaac reports for Wired. “‘Despite announcing an end to manufacturing webOS hardware, we have decided to produce one last run of TouchPads to meet unfulfilled demand,’ HP spokesman Mark Budgell wrote in a company blog post. ‘As we know more about how, when, and where TouchPads will be available, we will communicate that here and through e-mail to those who requested notification.'”

“Budgell says it will be a few weeks before devices from the additional run will be available for purchase,” Isaac reports. “The blog post signals further confusion from a company in upheaval.”

“Two weeks ago, HP announced suddenly it would end production on all of its mobile hardware, including the soon to be released Pre 3 and Veer smartphones. The decision also included the company’s iPad competitor, the TouchPad, killed off a mere 49 days after its debut in July. Circulating rumors suggested third-party retailers were sitting on hundreds of thousands of unsold stock,” Isaac reports. “HP followed its announcement by slashing prices on remaining TouchPad inventory, reducing the price of the 16-gigabyte TouchPad to $100, and the 32-gig version to $150.”

Isaac reports, “There’s no guarantee, however, that HP will continue to sell the last round of tablets at a $100 rate. Hardware teardown web site iSupply speculates that, in terms of components alone, a 16-GB TouchPad costs HP approximately $300 to build. That’s a $200 bath HP is taking on each individual unit sold, not including the cost of labor, shipping and associated expenses.”

MacDailyNews Take: Hey, yeah, let’s ramp up another run and either lose hundreds of dollars per unit or fill up warehouses again with unsold fake iPads! There’s some real genius business acumen over there in OPIPL (Overpriced Printer Ink Peddler Land). By comparison, Apotheker has achieved the impossible: Making Ballmer look like a competent CEO.

[Thanks to MacDailyNews Readers “Fred Mertz” and “Terry O.” for the heads up.]

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So I can see already that HP received tons (errrr…a handful) of requests for the $99 bedside clock and they think “Hey maybe there is a demand for our product. Let’s make more.” Notification goes out to the 75 people that asked about the clock and say they can now have it mailed at a price of $399. Whoops, you were only interested at $99? I guess it will sit in a warehouse until we realize there’s only demand at $99.

This is the only semi-rational explanation I’ve come up with for the whole “$99 fire sale” situation. Working at a retailer that sells TouchPads, I can tell you, there’s a metric shit-ton of unfulfilled demand for them at the $99 pricepoint. Hell, at $99 I picked one up myself despite being a pretty big Apple guy, because if nothing else I could always use it as a digital photo frame (a 10″ digital photo frame with this kind of screen costs quite a bit more, nevermind the internal memory).

They could *easily* have sold a great many (maybe all) of these at $199/$249. The only reason I can think of not to was to try and create demand/hype for it and build the WebOS userbase to make it more attractive to sell or license WebOS to someone else.

Frankly, I’d rather see WebOS as the primary competitor to the iPad than Android. I think WebOS is a way better OS than Android (though I prefer iOS to either). So I really hope that’s their game plan. If it is, it might work; they might ultimately add more to the price they get for WebOS than they spent on blowing out the tablets at $99/$149. From that perspective, another manufacturing run doesn’t seem quite as crazy.

Jesus that new CEO is looking like the WRONG pick if you are vested in HP in any way.

How the hell did this decision get made exactly ?!??!??

WORKER: “Sir! We sold out of TouchPads”

CEO: “Well I’ll be damned! People DO want these things after all! That damn hippie Steve Jobs isn’t the only son of a gun with BRAINS in this here industry. Fire up the assembly line! We need to make more!”

WORKER: “Uh sir we have announced we are getting out of hardware and are losing over $200 on each TouchPad we produce. We sold what was left of them and took a loss to exit the market. This was your decision sir.”

CEO: “DIDN’T YOU HEAR WHAT YOU JUST SAID? WE SOLD OUT! PEOPLE WANT THESE! MAKE MORE! I’ll decide if we are really leaving the hardware business later, as for the cost, don’t worry about it, it’s only your pension and the future of a company I was never here to build or care about!”

Yes, it might become the cheapest and best Android tablet made so far, but the funny thing was that HP tested WebOS on their own hardware and an iPad 2 – WebOS ran twice as fast on an iPad 2. Specs aren’t everything, obviously.

The one scenario where it might make some sense is where HP has a pile of components already committed to or purchased. They either throw all those components in the landfill and lose ALL the money, or they put them together and recover SOME money. In that scenario, even the fire-sale price is much better than zero.

In order to continue with the $99 TouchPad commitment, HP will have to scrounge for every rejected components from Taiwan and China to fulfill its money-losing proposition. HP has a big masochistic appetite for punishment.